RES — RPC, Inc.

Summary of RPC, Inc.'s Q4 2025 Earnings Call

1. Key Financial Results and Metrics:

• Revenues: Decreased 5% sequentially to $426 million.
• Operating Segments:
  • Technical Services (95% of total revenues) down 4%.
  • Support Services (5% of revenues) down 18%.
• Adjusted Diluted EPS: $0.04, with adjustments totaling $0.06 related to wireline cable expenses and acquisition-related costs.
• Adjusted EBITDA: $55.1 million, down from $67.8 million; EBITDA margin decreased 230 basis points to 12.9%.
• Operating Cash Flow: $201.3 million; after CapEx of $148.4 million, free cash flow was $52.9 million.
• Cash Position: Approximately $210 million in cash, with no borrowings from a $100 million revolving credit facility.

2. Strategic Updates and Business Highlights:

• Service Line Performance:
  • Pressure pumping revenue down 6% due to holiday shutdowns and idled fleets.
  • Growth noted in Spinnaker's cementing, Patterson Tubular Services, and Cudd Pressure Control.
  • Thru Tubing Solutions launched new technologies (A-10 downhole motor and Metal Max) aimed at improving performance and market share.
• Market Diversification: Cudd Pressure Control is expanding into cavern gas storage, with a new big bore snubbing unit expected in 2026.
• Focus on Less Capital-Intensive Services: RPC aims to grow through organic means and acquisitions while maintaining financial flexibility.

3. Forward Guidance and Outlook:

• 2026 Capital Expenditures: Expected to be between $150 million and $180 million, reflecting delays from 2025 and a cautious approach based on market conditions.
• Market Conditions: Management anticipates that oil and gas prices need to improve significantly to boost customer activity levels.
• M&A Strategy: RPC is open to acquisitions but will remain patient given the current market landscape, focusing on strategic fits rather than competitive bidding.

4. Bad News, Challenges, or Points of Concern:

• Revenue Declines: Notable sequential declines across most service lines, particularly in pressure pumping and wireline services.
• Weather Impacts: Early 2026 operations affected by winter storms, leading to lost operating days that will impact near-term profitability.
• High Effective Tax Rate: Unusually high due to liquidation of company-owned life insurance policies and acquisition-related costs.
• Competitive Pressures: Ongoing oversupply in pressure pumping and potential market consolidation may impact pricing and margins.

5. Notable Q&A Insights:

• Market Activity: Management indicated uncertainty regarding the impact of winter weather on Q1 2026 performance, particularly in key regions like the Permian and Mid-Con.
• Competitor Dynamics: Some competitors are facing challenges, potentially reducing competition in certain service lines, which could benefit RPC.
• Capital Allocation: RPC is evaluating various uses for its cash reserves, including potential stock buybacks, but no immediate plans were disclosed.
• Wireline Accounting Changes: The decision to change wireline cable accounting treatment was driven by changes in work type and usage patterns, aimed at aligning financial reporting with operational realities.

Overall, RPC, Inc. reported a challenging fourth quarter with declines in revenue and profitability, while also highlighting strategic initiatives and cautious optimism for future growth amidst market uncertainties.